nep-bec New Economics Papers
on Business Economics
Issue of 2022‒05‒30
seven papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Employee Relations Practices and Firm performance: A Conceptual Model Proposal By Abdeljalil Miliani; Aziz El Khazzar; Imad Lhassan
  2. Analysing Gender Equality at the Firm Level By Dania Eugenidis; Jan Kinne; David Lenz
  3. Multiproduct Mergers and the Product Mix in Domestic and Foreign Markets By Jackie M.L. Chan; Michael Irlacher; Michael Koch
  4. Market Power & Within-Firm Inequality By Kazakis, Pantelis
  5. Stylized facts on the evolution of profit rates in the US: Evidence from firm-level data By Leila Davis; Joao de Souza
  6. Globally Engaged Firms in the Covid-19 Crisis By Cristina Constantinescu; Ana Margarida Fernandes; Arti Grover; Stavros Poupakis; Santiago Reyes
  7. Financial Fraud and Investor Awareness By Zhengqing Gui; Yangguang Huang; Xiaojian Zhao

  1. By: Abdeljalil Miliani (UAE - Université Abdelmalek Essaâdi); Aziz El Khazzar (UAE - Université Abdelmalek Essaâdi); Imad Lhassan (UAE - Université Abdelmalek Essaâdi)
    Abstract: Employee relations management has become an important topic in management sciences, for practitioners and theorists. Also, it's an aspect of human resource management that has an impact on the performance of SMEs and large firms in the 21st century due to increased competition, changing customer needs, technology and globalization in an ever-changing business environment. In the same context, global and local firms are challenged to build good relationships with their employees in order to improve their performance (financial and non-financial performance) in a changing business environment. Aspects of employee relations that can affect firm performance include employee engagement, employee expression, and employee involvement. When it comes to performance, this is a polysemous concept that is difficult to define. However, there are several researchers who have increasingly focused on the criteria for evaluating firm performance, which are based on the financial and non-financial conception of performance, and which have a relationship with social factors. This paper aims to shed original light on a subject that is still little addressed in management sciences. Our goal is to study the contribution of employee relations practices to firm performance. Through a critical and in-depth reading, we will be able to propose a new research model to explain the impact of employee relations practices on firm performance. The model developed states that employee relations practices indirectly influence the level of firm performance. Moreover, it shows that the variables related to human capital (job satisfaction), without forgetting justice at work (organizational variable) fill a central place and favor the contribution of employee relations to firm performance.
    Keywords: Firm performance,Job Satisfaction,Employee Relations,Organizational Justice
    Date: 2022
  2. By: Dania Eugenidis (University of Giessen); Jan Kinne (ZEW); David Lenz (University of Giessen)
    Abstract: The role of gender in the labour force and potential inequalities between men and women have been widely discussed. Despite efforts to align gender roles in recent decades, high levels of inequality are not an exception but rather the standard. These inequalities can lead to the respective minorities’ general dissatisfaction, which affects the working atmosphere and ultimately a firm’s economic success (Hoogendoorn et al. 2013). Recent quantitative studies confirm this dissatisfaction exists. However, analyses only take place at a country or regional level. Therefore, conclusions can be drawn on an aggregated level, whereas underlying structural differences between individual firms remain undetected. Alternative ways to measure inequalities include qualitative studies for individual companies. However, no generalized inference can be made. Our proposed framework, the Gender Equality Firm Index (GEFI), allows for quantitative gender equality analysis at the company level. GEFIaims to explore the latent and the concrete implementation of gender equality in firms. Specifically, we derive firm-level measurements from large-scale data extraction of firm websites and combine them with official data. We consequently derive a gender equality score for each company, making it possible to draw conclusions at any given level of granularity. We demonstrate the applicability of our framework in a case study including nearly 1 million firms throughout Germany. Thereby, we find that mainly urban and western German firms in sectors such as health and social services comparably enforce gender equality the most, which is in line with the existing literature.
    Keywords: Gender Equality Index; Firm level studies; Web Minig; Germany; Gender
    Date: 2022
  3. By: Jackie M.L. Chan; Michael Irlacher; Michael Koch
    Abstract: This paper investigates the effects of mergers on the product mix of multiproduct firms. Thus, we open the black box of post-merger efficiency improvements to reveal a new margin of adjustment along the product dimension. We analyze horizontal mergers in a theoretical model where oligopolistic firms employ a flexible manufacturing technology and allocate assets between differentiated varieties. After a merger, acquirers drop products from their consolidated domestic product portfolio and reallocate assets towards core varieties. We further demonstrate that such merger-induced efficiency gains imply greater activity in foreign markets. Using detailed Danish register data, we document novel facts regarding mergers and multiproduct firms and find empirical evidence strongly supporting the model’s predictions. Our results show that the number of domestic products of the post-merger acquirer falls relative to the sum of the premerger acquirer and target, that skewness of domestic sales rises towards core products, and that export activity increases.
    Keywords: multiproduct firms, horizontal mergers, flexible manufacturing, exports, product mix, event study
    JEL: F12 F14 G34 L22 L25
    Date: 2022
  4. By: Kazakis, Pantelis
    Abstract: Income inequality in the United States is on the rise. At the same time, firm market power has also increased. In this paper, I attempt to shed light on the relation between these two variables. Using data for U.S. firms I find a positive relation between market power and top executive pay. I also find that market power is positively associated with executive wage-to-employee wage ratios, potentially indicating that market power is a force that increases within-firm inequality
    Keywords: within-firm inequality, CEO & executive pay, firm markups, competition
    JEL: J2 J31 J33 L1
    Date: 2022–04–21
  5. By: Leila Davis; Joao de Souza
    Abstract: This paper builds on the literature analyzing the aggregate profit rate to describe profitability across the distribution of firms in the post-1970 U.S. economy. While median profitability mirrors well-established aggregate patterns, including a falling rate of profit through the mid- 1980s and a recovery thereafter, it also masks a striking post-1980 widening of the distribution. In this paper, we document this widening of the profitability distribution, and identify factors driving changes in profit rates at each end of the distribution. At the top, we show that, while top-end operational profit rates (operational returns on tangible capital) soar after 1980, this rise disappears when accounting for financial and intangible assets. We show that firms with high operational profit rates hold large stocks of financial and intangible assets, relative to those with high total profitability, but that larger shares of these assets fail to translate into higher returns on all assets. Thus, once accounting for post-1980 changes in asset composition, growth in top profit rates disappears. At the bottom, profit rates of the least profitable quintile of U.S. nonfinancial corporations become systematically and increasingly negative after the early 1980s. We show that this decline reflects persistently negative average profitability in new post-1970 cohorts, rather than falling profitability within continuing firms.
    Keywords: Profit rates; intangible assets; cash; entry dynamics
    JEL: B5 L1
    Date: 2022–05
  6. By: Cristina Constantinescu; Ana Margarida Fernandes; Arti Grover; Stavros Poupakis; Santiago Reyes
    Abstract: This paper analyzes the initial impact and recovery of globally engaged firms from the COVID-19 crisis. It uses rich survey data of nearly 65,000 firm-year observations in 45 countries spanning three waves of data collection. The findings are organized in a series of stylized facts, which suggest that although the pandemic had an immediate adverse impact on most firms, the globally engaged ones are recovering faster, possibly due to their higher capabilities. Among globally engaged firms, those directly involved with international markets show better recovery than the ones that were indirectly involved. These results mask wide variation by firm traits, sectoral attributes, and country characteristics. At the core of the recovery of globally engaged firms is their heightened response to the crisis by finding novel ways to adapt supply chains even in the presence of lockdowns and uncertainty. These firms swiftly digitalized, introduced new products and changed their markets and sources of inputs. Over and above their capabilities, global engagement cushions firms against shocks. Policymakers could therefore facilitate global linkages by providing information on potential markets and products, by making production flexible in terms of facilitating remote work, reducing the rigidity of contracts; and incentivizing financial institutions to issue instruments that reduce uncertainty risk.
    Keywords: Covid-19, crisis, firms, recovery, trade, exporters, global value chains
    JEL: D22 F14 L20 L25 O10
    Date: 2022
  7. By: Zhengqing Gui (Economics and Management School, Wuhan University); Yangguang Huang (Department of Economics, Hong Kong University of Science and Technology); Xiaojian Zhao (Monash University and Chinese University of Hong Kong (Shenzhen))
    Abstract: We study a retail financial market with naive investors who are unaware of the possible financial fraud. In our model, firms strategically choose whether to offer normal or fraudulent products to possibly unaware investors. Having new firms in the market makes offering normal products less profitable and thus discourages firms from behaving honestly. In a leader-follower environment, an honest firm may sell a normal product to sophisticated investors, while a dishonest firm targets only naive investors. By disclosing information about financial fraud, the honest firm can steal market share from the dishonest firm, but doing so may induce the dishonest firm to deviate and compete for the normal-product market, which limits the honest firm's incentive to disclose information. Policy instruments, such as increasing legal punishment, implementing a public education program, and lowering the interest rate ceiling, may also trigger the honest firm to strategically shroud information. As a consequence, these policies cannot ensure an improvement in investors' welfare.
    Keywords: Product design, Heterogeneous firms, Trade liberalization, Consumer search
    JEL: F10 F12 L15
    Date: 2020–05

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